MBFM 3001

M.B.A. DEGREE EXAMINATION, JANUARY 2022.

Third Semester

Finance

STRATEGIC FINANCIAL MANAGEMENT

Time : Three hours Maximum : 100 marks

PART A — (5 u 6 = 30 marks)

Answer any FIVE questions out of Eight questions.

1. What is rationalization for the goal of maximizing

the wealth of shareholders?

2. What are the important characteristics of

financial planning? How are financial
requirements estimated?

3. Enlighten the various techniques of analyzing risk

in investment of a project.

4. What is the main purpose of corporate

restructuring?

5. Differentiate between operating lease and

financial lease.

6. What are the key elements of financial strategy?

7. What are the financing options for startups in
small business in India?

8. Define the term ‘takeover’. What are the objectives

which takeover seeks to achieve?

PART B — (5 u 10 = 50 marks)

Answer any FIVE questions out of Eight questions.

9. Define strategic planning. Discuss the various

constraints of strategic planning with suitable
example.

10. What is financial model and used for? List out the
steps to create a financial model and its risks
drawn in financial modeling in detail.

11. Elucidate the concept of payback period. Why does

this method enjoy a good deal of popularity among
businessmen? What are its limitations?

12. What is meant by sensitivity analysis. Discuss the

different methods used in the application of
sensitivity analysis in strategic financial
management in detail.

13. An asset worth Rs. 3,43,300 has to be acquired.

There are two options
(a) Leasing
(b) Buying through loan.

2 MBFM 3001
 Under leasing option, Yearly lease rent would be
Rs. 1,20,000, has to be paid for 5 years. Under
loan option the company has to pay 14% interest
and the loan has to be repaid within 5 years. The
firm has 50% tax bracket. The life of the asset is 5
years and has to be depreciated on straight line
method. Which financial alternative should we
select?
14. What is meant by High Technology Investment?
Discuss the objectives, benefits and limitations of
high technology strategic investment.
15. Describe the various steps to make venture capital
more attractive and popular among investors.
What are the SEBI guidelines for venture capital?
16. What are the sources of innovation finance in new
ventures? Describe any two source of financing
and how would be innovative sources?

PART C — (1 u 20 = 20 marks)
(Compulsory)
17. The following data relates to two companies
A and B.
Particulars Company A Company B
Number of Equity shares 20,000 10,000
Profit after Tax 60,000 20,000
Price Earnings Ratio (P/E) 20 12
EPS Rs.3 Rs.2

3 MBFM 3001
Company A is considering the purchase of
company B in exchange of 1 share in A for every
2 shares held in B.
You are required to illustrate the impact of merger
on earnings per share assuming that there would
be synergy benefits equal to 25 percent increase in
the present earnings after tax due to merger.
_______________

4 MBFM 3001
 MBFM 3002
M.B.A. DEGREE EXAMINATION, JANUARY 2022.

Third Semester

Finance

BANKING AND INDIAN FINANCIAL SYSTEMS

Time : Three hours Maximum : 100 marks

PART A — (5 u 6 = 30 marks)

Answer any FIVE questions out of Eight questions.

1. Define Bank. Outline the Structure of Banking
System.
2. What is crossing of a Cheque? List out the
different types of Crossing.
3. Explain the functions of Central Bank.
4. Write a short note on banking legislations in
India.
5. Enumerate the Services of IBRD.
6. Describe the functions of primary markets.
7. List out the entry norms laid down by SEBI for
making public issues.
8. What is Foreign Direct Investment? Outline the
entry routes and options available in India.
 PART B — (5 u 10 = 50 marks)

Answer any FIVE questions out of Eight questions.

9. Define endorsement of cheque. Discuss in detail

the various kinds of endorsement of cheque.

10. Describe the structure of Indian money market

and explain its features.

11. Explain the importance of Capital Market for

development of economy.

12. Discuss in detail the different types of money

market instruments in India.

13. Describe the role of NABARD in the economic and

social development of the country.

14. Define Mutual funds. Discuss the various types of

mutual funds in detail.

15. Explain the divisions and functions of Indian

Fiscal System.

16. Discuss the salient features of Foreign

Institutional Investors (FIIs) in detail.

2 MBFM 3002
 PART C — (1 u 20 = 20 marks)
(Compulsory)

17. Case Study :

Seven Star Ltd. issued prospectus for the
subscription of its shares for Rs. 400 crores in
2017. The issue was oversubscribed by 10 times.
The company issued shares to all the applicants
on pro-rata basis. Later SEBI inspected the
prospectus and found some misleading statement
about the management of the company in it. SEBI
imposed a penalty of Rs. 3 crores and banned its
three executive directors for dealing in securities
market for three years. Identify the function and
its type performed by SEBI in the above case.
_______________

3 MBFM 3002
 MBFM 3003/GN 3003
M.B.A. DEGREE EXAMINATION, JANUARY 2022.

Third Semester

General

MERCHANT BANKING AND FINANCIAL SERVICES

Time : Three hours Maximum : 100 marks

PART A — (5 u 6 = 30 marks)

Answer any FIVE questions.

1. Explain any five Fund Based Services rendered by

Financial Services Institutions.

2. Write a short note on:

(a) Registrars to an Issue
(b) Promoters Contribution

3. Discuss the process of IPO through Book-building.

4. Explain the Modus Operandi involved in

Forfeiting.

5. What do you mean by the following terms:

(a) Asset Liability Management
(b) Mortgage Based Securitisation

6. Enumerate the role of Unit Trust of India (UTI) in

Mutual Fund industry.
7. Define Insurance and explain the different types
of Insurance and Insurance Companies.

8. Examine about the credit rating process followed

by credit rating agency.
PART B — (5 × 10 = 50 marks)
Answer any FIVE questions.

9. Specify the various kind of Innovative Financial

Instruments issued by Corporate India.

10. Describe the procedure involved in the issue of

Indian Depository Receipts (IDR).

11. What is IPO and explain the IPO issue

management activities performed by Merchant
Banker.

12. Enumerate the role of National Housing Bank in

the field of Housing Finance.

13. Evaluate about the origin and growth of Venture

Capital Financing.

14. Briefly explain the factors to be considered before

selecting a Mutual Fund?

15. Examine the pros and cons of using the credit

card.

16. Explain about the Retirement Plans and its

features.

2 MBFM 3003/GN 3003

 PART C — (1 × 20 = 20 marks)

Compulsory

17. ICICI Group offers a wide range of banking

products and financial services to corporate and
retail customers through a variety of delivery
channels and through its specialised group
companies and subsidiaries in the areas of
personal banking, investment banking, life and
general insurance, venture capital and asset
management. With a strong customer focus the
lClCl Group Companies have maintained and
enhanced their leadership positions in their
respective sectors. You are required to answer the
following questions
(a) Identify the funds based and fee based
services provided by ICICI — Group to retail
customers.
(b) Identify the fee based and fund based services
provided by ICICI - Group to its corporate
customers.
(c) What considerations are to be kept in mind
which extending these services to customers?

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3 MBFM 3003/GN 3003

 MBFM 3004
M.B.A DEGREE EXAMINATION, JANUARY 2022.

Third Semester

Finance

PROJECT MANAGEMENT

Time : Three hours Maximum : 100 marks

PART A — (5 u 6 = 30 marks)

Answer any FIVE questions.

All questions carry equal marks.

1. Briefly explain the project management.

2. Write three basic elements which must be

considered in a project cycle.

3. Bring out the concept of pre-feasibility studies.

4. A project need 40,000 as initial investment and it

will generate an even annual cash inflow of 10,000
for ten years, what is the payback period?

5. Highlight the rules for developing a project

network?
6. What are network analysis techniques?

7. Differentiate between managing versus leading a

project.

8. What is blended learning?

PART B — (5 u 10 = 50 marks)
Answer any FIVE questions.
All questions carry equal marks.

9. Explain the design of project portfolio

management system.

10. Illustrate the steps in developing the

responsibility matrix.

11. Elaborate the various investment phases from

project planning to project completion.

12. A company is considering the purchase of a new

machine. Two alternative machines (X and Y)
have been suggested, each having an initial a
company is considering the purchase of a new
machine. Two alternative machines (X and Y)
have been suggested, each having an initial cost of’
20,00,000 and requiring’ 1,00,000 as additional
working capital at the end of 1st year. Earnings
after taxation are expected to be as follows:

2 MBFM 3004
 Year Cash flows (‘)
Machine X Machine Y
1 2,00,000 6,00,000
2 6,00,000 8,00,000
3 8,00,000 10,00,000
4 12,00,000 6,00,000
5 8,00,000 4,00,000

The company has target of return of capital of 10%

and on this basis, you are required to prepare the
profitability of the machines and state which
alternative you consider financially preferable
using NPV method.

Note: the following table gives the present value of

‘1 due in ‘n’ number of years.
Year 1 2 3 4 5
PV of ‘1 at 20% .91 .83 .75 .68 .62

13. Explain the various states in Project Life Cycle.

14. Compare and contrast PERT and CRM.

15. How you will develop an integrated

Cost/Schedule/System?

16. Assess the steps in defining projects.

3 MBFM 3004
 PART C — (1 u 20 = 20 marks)
Answer the following.

17. An R & D project has a list of tasks to be

performed whose time estimates are given in the
Table as follows.

• Draw the project network.

• Find the critical path.

• Find the probability that the project is

completed in 19 days. If the probability is
lessthan20%, find the probability of
completing it in 24 days.
Activity Activity name T0 tm tp
i j (in days)
1-2 A 4 6 8
1-3 B 2 3 10
1-4 C 6 8 16
2-4 D 1 2 3
3-4 E 6 7 8
3-5 F 6 7 14
4-6 G 3 5 7
4-7 H 4 11 12
5-7 I 2 4 6
6-7 J 2 9 10
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4 MBFM 3004
 MBFM 3005
M.B.A. DEGREE EXAMINATION, JANUARY 2022.

Third Semester

Finance

MANAGEMENT ACCOUNTING

Time : Three hours Maximum : 100 marks

PART A — (5 u 6 = 30 marks)

Answer any FIVE questions.

1. Describe the objectives of financial accounting.

2. Explain the criteria’s to evaluate the budgetary

control.

3. State the role of preparation of functional budget.

4. From the following information, calculate Break-

even point and Sales to earn profit of Rs. 2,40,000.
Particulars Rs.
Sales 8,00,000
Fixed cost 3,60,000
Variable cost 5,60,000
5. At 5000 units, the XYZ company loses Rs.45000. If
it produces 1000 additional units, it will do Rs.
1300 better. What is the contribution margin per
unit, the total fixed costs, and the breakeven point
in units.

6. The following are the summaries of the balance

sheets of the VB Ltd. as on 31-12-14 and 31-12-15.
Liabilities 31.12.2014 31.12.2015 Assets 31.12.2014 31.12.2015
Rs. Rs. Rs. Rs.
Share capital 3,00,000 4,00,000 Buildings 1,20,000 2,50,000
Debentures 2,00,000 2,50,000 Machinery 3,00,000 2,60,000
Profit & Loss 40,000 60,000 Stock 90,000 80,000
A/c
Creditors 70,000 80,000 Debtors 1,40,000 2,40,000
Bank 25,000 25,000 Prepaid 15,000 25,000
overdraft expenses
Provision for 30,000 40,000
Taxation
Total
6,65,000 8,55,000 6,65,000 8,55,000

The following additional information is obtained:

(a) The net profit for the year was Rs. 40,000
after charging depreciation.
(b) During the year depreciation charged was
Rs. 30,000 on building and Rs. 40,000 on
machinery.
(c) The company purchased during the year
buildings worth Rs. 1,60,000.

2 MBFM 3005
 (d) Dividend paid during the year amounted to
Rs. 20,000.
(e) From the above information, prepare a
statement of sources and application of funds
for the year 2015.

7. The summarized balance sheet of AB Ltd. as on

31.12.15 and 31.12.2016 are as follows:
Liabilities 2015 2016 Assets 2015 2016
Share capital 4,50,000 4,50,000 Fixed asset 4,00,000 3,20,000
General 3,00,000 3,10,000 Investment 50,000 60,000
Reserve
P & L a/c 56,000 68,000 Stock 2,40,000 2,10,000
Creditors 1,68,000 1,34,000 Debtor 2,10,000 4,55,000
Tax provision 75,000 10,000 Bank 1,49,000 1,97,000
Mortgage loan – 2,70,000
Total 10,49,000 12,42,000 10,49,000 12,42,000

Additional Details:
(a) Investment costing Rs. 8,000 were sold for
Rs. 8,500
(b) Tax provision made during the year was Rs.
9,000
(c) During the year part of fixed assets costing
Rs 10,000 was sold for Rs 12,000 and the
profit was included in P&L A/c. You are
required to prepare cash flow statement for
2016.

8. Explain the various types of the reports.

3 MBFM 3005
 PART B — (5 u 10 = 50 marks)
Answer any FIVE questions.

9. Describe the objectives, nature and scope of

management accounting.

10. Machine A costs Rs. 1,00,000, payable

immediately. Machine B costs Rs. 1,20,000, half
payable immediately and half payable in one
year’s time. The cash receipts expected are as
follows:
Year A B
(at the end)
1 20,000 —
2 60,000 60,000
3 40,000 60,000
4 30,000 80,000
5 20,000 —

With 7% cost of capital, which machine should be

selected?

11. A manufacturing concern, which has adopted

standard costing, furnished the following
information :
(a) Standard Material for 70 kg
(b) finished product: 100kg.
(c) Price of materials: Re. 1 per kg.
4 MBFM 3005
 (d) Actual Output: 2,10,000kg.
(e) Material used: 2,80,000kg.
Cost of material: Rs. 2,52,000.

Calculate: (i) Material Usage Variance

(ii) Material Price Variance (iii) Material Cost
variance.

12. Calculate Labour cost variance from the

information:

Standard production 100 units

Standard Hours 500 hours
Wage rate per hour Rs.2
Actual production 85units
Actual time taken 450 hours
Actual wage rate paid Rs. 2.10 per hour

13. Asian paints manufacture 1,000 tins of paints

when working at normal capacity. It incurs the
cost of Rs. 16 in manufacturing one unit. The
details of this cost are given below:
Particulars Rs.
Direct material 7.50
Direct labor 2.00
Variable overheads 2.50
Fixed overheads 4.00
Production cost (per unit) 16.00
5 MBFM 3005
 Each unit of product is sold for Rs. 20 with
variable selling and administrative expenses of Rs.
0.50 per unit of production. During the next 3
months, only 500 units can be produced and sold.
Management plans to close down the factory
estimating that the fixed manufacturing cost can
be reduced to Rs. 2,000 for the quarter. When the
plant is operating, the fixed overhead costs are
incurred at a uniform rate throughout the year.
Additional cost of plant shut down for the three
month is estimated at Rs. 2,800.

Express your view whether the plant should be

shut down for three months and calculate the
shutdown point for three months in units of
products.

14. From the Balance Sheets of Manan Ltd. as on

31-12-2015 and 31-12-2016 and other additional
information given to you. Prepare:
Liabilities 2015 2016 Assets 2015 2016
Rs. Rs. Rs.
Rs.

Eq. Share 1,00,000 1,50,000 Goodwill 30,000 28,000

capital of
Rs. 10

General 60,000 20,000 Building 60,000 1,00,000,

reserve

P & L A/c 10,000 12,000 Machinery 40,000 95,000,

10% – 50,000 Investment 15,000 12,000

Debenture

6 MBFM 3005
Liabilities 2015 2016 Assets 2015 2016
Rs. Rs. Rs.
Rs.
Creditors 25,000 31,000 Stock 16,000 25,000
Bills 20,000 20,000 Debtors 49,000 21,000
Payable
Provision of 15,000 17,000 Bank 12,000 13,000
taxes balance
Preliminary 8,000 6,000
expenses
2,30,000 3,00,000 2,30,000 3,00,000

Additional Information:

(a) On 1-1-2016, company has given bonus

shares from General Reserve. One bonus
share is given against two equity shares.

(b) Taxation paid during the year was

Rs. 14,000 and interim dividend of Rs. 8,000
was also paid.

(c) Depreciation charged on building is Rs. 6,000

and on machinery is Rs. 4,000.
(d) A machine having cost value of
Rs. 10,000 was old with profit. This profit
was credited to capital reserve A/c.
(e) During the year debentures were issued at
5% discount.

7 MBFM 3005
 (f) Investments of Rs. 5,000 cost value were sold
at 20% profit.
(g) Closing stock of 31-12-2015 was shown at
price, which is 20% less than cost price.
Closing stock of 31-12-2016 is shown at cost
price. You have to consider original cost price
of stock of 31-12-2015.
(h) Goodwill was written off against capital
reserve.

15. The following are the summarized financial

statements of XYZ Co. Ltd. for 2017 and 2018:

Statement of Financial Position

Particulars 2018 2017
Assets:
Cash 9,000 15,000
Debtors 25,000 31,000
Stock 60,000 45,000
Fixed asset at cost 1,20,000 1,05,000
2,14,000 1,96,000
Liabilities:
Share Capital 32,500 31,500
6% Debentures due on 31-12-2020 50,000 70,000
Retained Earnings 38,500 27,500

8 MBFM 3005
 Particulars 2018 2017
Creditors 20,000 12,500
Income-tax Payable 36,000 27,500
Accumulated Depreciation 37,000 27,000
2,14,000 1,96,000

Income Statement(For The Year Ending 31st December)

Particulars 2018 2017
Amount Amount
Sales 4,25,000 4,50,000
Operating Expenses(including 3,40,000 3,80,800
depreciation Rs. 10,000)
Interest on Debentures 3,000 4,200
Net Profit Before Tax 82,000 65,000
Profit for the year Transferred to 36,000 27,500
retained Earning
46,000 37,500

Statement of Retained Earnings

Particulars Amount Amount
Retained Earnings — Beginning 27,500 25,000
Net Profit for the year 46,000 37,500
73,500 62,500
Dividends 35,000 35,000
Retained Earnings — End 38,500 27,500

Determine the funds from operations for the year

2018 and 2017.

16. Examine the objectives and types of reporting in

detail.
9 MBFM 3005
 PART C — (1 u 20 = 20 marks)
Compulsory.

17. A store sells t-shirts. The average selling price is

Rs. 15 and the average variable cost (cost price) is
Rs. 9. Thus, every time the store sells a shirt it has
Rs. 6 remaining after it pays the manufacturer.
This Rs. 6 is referred to as the unit contribution.
Suppose the fixed costs of operating the store (its
operating expenses) are Rs. 100,000 per year. Find
Break-even in units?
(a) if the owner desired a profit of Rs. 25,000,
what will be break-even point in Rupees?

(b) If fixed costs rose to Rs. 110,000, what will

be the break-even in units?

(c) If the average selling price rose to Rs.16,

whether break even volume would fall?

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10 MBFM 3005